Considerations in Developing a Vehicle Selector

If your drivers are all local service people, who carry their tools and spare parts to your customers in minivans, you may not need a vehicle selector. If they are salespeople, calling on a variety of clients in different areas of the country, the chances are more likely that you will need a vehicle selector.

A vehicle selector is basically a device that gives you control over the choice of vehicles available to your drivers, thus removing a lot of chaos from the purchase/lease/re-market process.

AF held a discussion with three fleet managers, who offered some considerations in developing a vehicle selector. They were Beatrice Coolican, global fleet manager, AlliedSignal; Tina Kourakos, assistant director, CIGNA Companies; and Karen Fries, corporate fleet operations manager, S.C. Johnson Wax Co.

How Broad Should Your Selector Be?

Once you have determined that you do need a selector for a certain class of vehicle, then you have to decide how much choice you are going to give your drivers.

Sometimes, the nature of your business requires that you offer a wide choice. For other companies, a narrow selector will serve. There are advantages on both sides.

A broad selector, with a wide range of choices:

• Produces the best driver satisfaction.
• Broadens dealer access.
• Spreads the risk of delivery delays.
• Helps remarketing.
• Pleases sales management.

On the other side, fleet managers who use a narrow selector argue that a broad based selector:

• Minimizes cost control.
• Limits use of manufacturer programs.
• Is difficult to administer.
• Often lacks vehicle balance on selector lists.

One problem with having a narrow selector is that if the vehicle you offer to the employees is similar to one bought by large car rental organizations, you can be hampered at remarketing time by thousands of the same make and model becoming available at the same time, reducing the price.

AlliedSignal is a supplier to all the major vehicle manufacturers, so that has a great effect on the selector Coolican offers.

Coolican noted that in her circumstances, she can't go with just one manufacturer. "You have to look at what your business is all about," she said, "and since AlliedSignal is in automotive, we have to satisfy domestic manufacturers, and we deal with all three." She added that she had been investigating the possibilities of single sourcing, but was looking into it as a way to bring costs down, and have better leverage with the manufacturers. "Even though we have some sectors that are not automotive-related, management still felt we had to consider our relationship with the manufacturers," she said.

"The need comes first," she said. "You can't put a person calling on Ford into a GM product. And you can't just put him into an Escort. Obviously that wouldn't impress too much when you have to take people around or you take a client out for entertainment. So we use full-size vehicles, Taurus, Intrepid, and the Buick Century."

Kourakos presented some reasons for limiting the selector, saying, "There are quite a few factors that come into play that need to be balanced when building a selector. At our company cost containment and cost consciousness are key considerations."

Kourakos explained that having a single source "gives you your buying leverage, which increases your cost-effectiveness, taking into account the acquisition costs, resale values and the running costs. Those are the primary factors. They all influence the decision," she concluded.

Fries noted that she has restricted what at one time was a broad selector. "A few years ago," she said, "I had five different vehicles on three different selector levels. It meant I had a total of 15 vehicles that I was wheeling and dealing with and trying to make work in different areas of the country and for every different individual's size and needs. Now," she wound up, "I am down to one manufacturer and one vehicle."

The three fleet managers concurred that even if you do not have a single-source selector, you can aim your drivers toward an optimum vehicle by careful selection of available option packages.

"There are ways to encourage your people to select vehicles which you've chosen," said Kourakos. "Although we have all three manufacturers, we lean towards buying from only one."

Fries concurred, adding, "You can do that through the packages you offer. If they take this one, they get power locks; with that one they get power windows too. They're not dumb, they're going to pick the one that gives them the most equipment."

Equipment Is Important

If drivers are unhappy with the vehicles they use, it may be a factor if drivers are being replaced as often as the vehicles. At many companies, drivers spend much of their awake hours in their vehicles, and a comfortable environment pays dividends in employee satisfaction.

"I also include the remote entry, because the added security is important to them. I give them a very well-equipped vehicle. It's important that they have a nice vehicle," said Coolican.

"I provide SUVs as exceptions to drivers who live in rural areas like Utah. But every company looks at cost savings, and in my company it's very important that we treat everybody equally and have the cost savings too, so I tend to go away from SUVs," Coolican said.

Should Drivers Influence the Selector?

Drivers will still want to have some influence on the vehicle they are going to have to live with every day. But how much of these requests should you take into account when developing your selector?

Coolican said, "I listen to the drivers and take their requests into consideration and evaluate them. I do a Customer service survey every year and part of that is I ask them what they would rather have. The majority of the drivers are very happy with the selection. Some of them you can never satisfy, and those I ignore."

Kourakos noted that, "With our general selector, the drivers don't have a lot of input. At CIGNA compact cars are the car size of choice. We're in a service environment, so we don't have to make provisions for entertaining a client."

At S.C. Johnson, Fries said, "I listen so far as equipment needs, but I don't offer much so for as vehicle choice." She said that when drivers said they wanted power locks, they got them. "But I'm not going to go out and ask them 'which would you prefer, a Ford, GM, DaimlerChrysler, or import?' because it would be a never-ending battle, that the company would lose."

Should You Allow Driver-Paid Options?

Some companies allow their drivers to add options to their vehicles at their own cost. The three fleet managers said that this is acceptable, within limits.

At CIGNA, Kourakos noted, "We used to restrict the dollar amount, but why? If they're willing to pay for it, and we get it back on the back end, why should we restrict it?" She added that there are things that are not allowed, such as larger tires, upgrading the engine, or upgrading the car completely. But she said that generally, "It benefits us in the long run."

Fries has a similar policy at S.C. Johnson. "Anything I can denote from the manufacturer as a single option, or as an inexpensive package, we allow. But where they get into leather or the aluminum wheels, we strongly urge them not to do it. If they were in an accident, or terminated, or change jobs within the company, they wouldn't recover what they paid for it."

Coolican said that AlliedSignal also allows driver-paid options, but she controls them tightly. "We do give driver-paid options. If they beg me enough for something like a leather interior, I say OK, but remind them that they'll have to buy the car to get their investment back." She added that the difficulty comes when one driver tells another "I've got leather," and the other asks, "Why didn't I get leather?" "Then I have to say that he wasn't willing to put the money into it, so I do a few exceptions. I like to give them comfortable seats. If they need a lumbar support, they sit in their cars for so many hours, I'd like to give it to them. But other than that I don't give any exceptions."

Factors Influencing Vehicle Acquisition

Several factors are quoted by fleet managers as influencing their selection of vehicles. In order of their importance in a recent NAFA survey, they are:

1.       Job Suitability (tie)

2.       Initial Cost (tie)

3.       Depreciation/Resale Value (tie)

4.       Safety Record

5.       Repair Record

6.       Order/Delivery Time/Distribution

7.       Serviceability/Ease of Maintenance

8.       Warranty Program

9.       Economy of Operation

10.   Country of Manufacture

11.   Company Image/Prestige

12.   Administrative Ease

13.   Incentive Program

14.   Driver Preference

15.   Insurance Cost

16.   Fringe Benefits/ Driver Satisfaction

 

Vehicle Selection Checklist

Here is a brief checklist that can help in developing an effective vehicle selector.

1.  Compile a list of fleet vehicles to be considered and price out the cars on a comparably-equipped basis.

2.  Review fuel economy information, plus compare operating and maintenance costs.

3.  Determine what optional equipment will be included at no cost to the driver.

4.  Determine what equipment, if any, will be allowed as driver-paid options.

5.  Project vehicle depreciation and holding costs.

6.  Factor manufacturers' fleet programs and incentives into depreciation and holding cost projections.

7.  Finally, incorporate factors such as vehicle use, size, image, administrative ease, driver perception, and driver satisfaction into the selector analysis.